Kevin Rudd has conceded defeat in the Australian election and announced he is to stand down as Labor leader.

Rudd appeared at 9.30pm as the crowd chanted his name. He appeared with his family, including his wife, Therese. The mood was upbeat, the crowd pleasantly surprised at holding the line in Queensland.

"I thought we lost," Rudd said.

"I know that Labor hearts are heavy across the nation tonight. As your leader, I accept responsibility. I gave it my all but it was not enough to win. Despite the prophets of doom I am proud we preserved the Labor party as a viable fighting force for the future."

Rudd said Labor was the party for "the little guy" and invoked Ben Chifley's "light on the hill" speech, saying the party had always come back from defeat.

Rudd surprised the crowd by saying Labor served "the forgotten people" - a phrase made famous by a Liberal prime minister Robert Menzies.

He said he had rung Tony Abbott and said he would welcome him graciously to the Lodge, just as John and Jeanette Howard had done for him in 2007.

Rudd declared Labor was the party of "hard heads and soft hearts". Its genius, he said, was that through war and peace Labor supporters "never allowed their hearts to harden".

"It is why the world admires Australia, because we can resolve our politics peacefully. That is why this is such a great country."

If you wandered into the Gabba cricket ground in Brisbane off the street, you would swear Labor had won, so good was Rudd's mood. He was beaming – genuinely relieved, it seemed, at making a good showing in just two months of leadership.

"I'm proud of the fact we have held each of the seats in Queensland and every cabinet member has been returned and I am proud all other members of executive have been returned," he said.

Rudd thanked his family, his staff and gave a special mention to his deputy prime minister, Anthony Albanese and finance minister Penny Wong. The crowd immediately began chanting their names.

He also mentioned the many "fine Labor men and women".

"We have known defeat before but throughout our history we have always risen from defeat to renew out party with vigor and fresh ideas for the future."

Rudd left the stage and was mobbed as he left the Gabba.

"They thought they were going to kill us but we proved them wrong; you cannot extinguish hope," he told a supporter as he left.

It had been a sombre start to the Labor party's election-night party. While Rudd had voted just after 1pm, he was not seen for the remainder of the afternoon, in spite of claiming he would fight right up until the polls closed.

The party venue was the heart of Rudd's hometown and home of the Brisbane Lions. It opened its doors just before the polls closed and, for a while, it looked as though there would be more journalists than Labor supporters.

Though the initial mood was sombre, eventually the Ruddsters filled the room – set apart by their hopeful T-shirts claiming, "It's our Ruddy future."

Early in the night, the beer and wine was flowing and Rudd's staff haunted the floor with grim faces and black humour. As the results rolled out, the realisation that Labor had well and truly lost government was tempered by the party’s better-than-expected showing in Queensland.

As the twin screens broadcast the ABC coverage, the crowd showed their delight or disgust as each electorate was revealed. As at the Roman Colosseum, the crowd booed or cheered.

The crowd played favourites, based on the enormity of the task or the profile of the person. Kevin Rudd was obviously a favourite, particularly given many polls had predicted he would lose his seat of Griffith.

Former treasurer Wayne Swan was also a favourite, proving a Queensland boy can never lose in his hometown.